The Public Provident Fund is savings-cum-tax-saving instrument in India, introduced by the National Savings Institute of the Ministry of Finance in 1968. The aim of the scheme is to mobilize small savings by offering an investment with reasonable returns combined with income tax benefits.
Individuals who are residents of India are eligible to open their account under the Public Provident Fund
Non-resident Indians (NRIs) are eligible to open an account under the Public Provident Fund Scheme. This is an act regulation by Indian Govt. However a resident who becomes an NRI during the 5 years’ tenure prescribed under Public Provident Fund Scheme, may continue to subscribe to the fund until its maturity on a non-repatriation basis. Deposit to PPF is tax deductible for individual taxpayers in India u/s 80C of Income Tax Act, 1961. FYI
A minimum yearly deposit of Rs. 500 is required to open and maintain a PPF account, and a maximum deposit of Rs.1.5 lakhs (w.e.f August 2014) can be made in a PPF account in any given financial year. The subscriber should not deposit more than Rs.1.50 lac per annum as the excess amount will neither earn any interest nor will be eligible for rebate under Income Tax Act. The amount can be deposited in lump sum or in a maximum of 12 installments per year.
The government of India decides the rate of interest for PPF account. The current interest rate effective from 1 April 2016 is 8.10% Per Annum (compounded annually)[2] which was revised from 8.70% effective from 1 April 2013.[3] Interest will be paid on 31 March every year. Interest is calculated on the lowest balance between the close of the fifth day and the last day of every month.
In a generalized view, if an individual deposits an amount of 1 lakh every year for 15 years without any exception, then he would receive a total sum of more than 30 lakh. This reflects the huge amount of benefit applicable on PPF account, for a total investment of 15 lakh (1 lakh every year * 15 years) interest received is more than 16 lakh, which is also in fact non-taxable.
Courtesy https://en.wikipedia.org/wiki/Public_Provident_Fund_%28India%29
